* Dollar rallies against safe-haven yen
* Commodity currencies benefit from OPEC output cut deal
* Questions remain on how to cut production
By Jemima Kelly
LONDON, Sept 29 The dollar hit an eight-day high
against the safe-haven yen on Thursday after an OPEC deal to cut
oil output spurred a move into riskier assets, though questions
over the efficacy of the agreement left the greenback off its
The Organization of the Petroleum Exporting Countries said
it would reduce output to a range of 32.5 million-33.0 million
barrels per day, a reduction of 0.7-2.2 percent, and the first
such deal since 2008.
The currencies of oil-exporting countries such as Canada
and Norway surged after the deal late on
Wednesday, but were slightly down on Thursday, mirroring a dip
in oil prices, as markets grew more sceptical on how OPEC would
implement the planned output cut.
Both currencies were still, however, trading more than 1
percent higher than their levels before the oil deal was
announced by 1150 GMT. The Norwegian crown had been a clear
winner, hitting a 14-month high of 9.00 per euro, but
fell about 0.3 percent on Thursday.
"Clearly it's not insignificant that it's the first OPEC
agreement of any sort for eight years, but I think there still
are many question marks over how deliverable the
output reduction will be," said RBC Capital Markets currency
strategist Adam Cole.
"The market has taken the rally in crude prices as a risk-on
driver...and I'm not sure how durable that is when the recovery
in crude prices is being driven by supply rather than demand."
Some analysts cautioned that the oil-cut deal is leaving
crucial details on how much each country will produce to be
decided at the next formal OPEC meeting in November, when an
invitation to join cuts could also be extended to non-OPEC
countries such as Russia.
The dollar had jumped as much as 1.1 percent to 101.75 yen
, its strongest since Sept. 21, but fell back to around
101.49 yen, still up 0.8 percent on the day.
Against a basket of currencies, the greenback was slightly
up on the day at 95.46.
"The environment for the dollar is still broadly supportive
- the Fed is still the only central bank that looks set to raise
interest rates," said BMO Capital Markets currency strategist
Stephen Gallo, in London.
"At a time like this you tiptoe back into yield, you tiptoe
back into carry," he added, referring to the practice of
borrowing a low-yielding, low-risk currency and selling it to
buy a riskier one with a higher return.
The Australian dollar also hit a three-week high of
$0.7711 - the country exports various natural resources even
though it is a net importer of oil - but was down 0.3 percent by
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(Additional reporting by Hideyuki Sano in Tokyo; Editing by